What do you mean by re issue of forfeited shares?

What is meant by forfeitures of shares?

A forfeited share is an equity share investment which is cancelled by the issuing company. A share is forfeited when the shareholder fails to pay the subscription money called upon by the issuing company.

Can forfeited shares be re issued at?

These shares can be reissued at par, at premium or at discount. Generally, these shares are reissued at a discount i.e. at a price which is less than its nominal value. The amount of discount allowed at the time of reissue in no case should be more than the amount forfeited on such shares.

What ways forfeited shares are reissued?

There are four situations in which re-issue of shares take place.

  • Forfeited shares reissued at discount when originally issued at par.
  • Shares reissued at par or at premium, when originally issued at par.
  • Forfeited shares reissued at par, at discount and at premium when originally issued at premium.

How do you record forfeited shares?

When Forfeiture of shares Issued at Par

The company debits the Share Capital Account with the amount called-up up to the date of forfeiture on shares. It credits the Shares Allotment Amount or Shares Call Account with amount called-up on forfeited shares but due from the shareholders.

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What is issue of shares at par?

Issue of Shares

The shares will be at par is when the shares are sold at their nominal value. Shares sold at a premium cost more than their nominal value, and the amount in excess of the face value is the premium.

What entries are made for the forfeiture of shares and their re-issue?

The shares are reissued as fully paid up to one of the directors @ Rs 9 per share. No entries are made on forfeiture but when the shares are reissued, the cash received is credited to Equity Share Capital Account.

When all forfeited shares are not reissued?

ADVERTISEMENTS: Accounting Entries Regarding Reissue of Forfeited Shares! The forfeited shares can be reissued by the company at any price. But in no case, the amount collected on the reissue of such shares plus the amount already forfeited be less than the amount credited as paid upon reissue of shares.

When forfeited shares are reissued the amount of discount?

10% of the capital reissued.